Millions of people will go to the polls this election year. We learn early on in childhood that what makes democracy work is the participation of the people.
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The New York Times, a liberal voice of the bourgeoisie, illustrates this quite clearly in a May 29 article on the impact of Employee Stock Ownership Plans on the retirement of sugar workers.
Elected politicians, beholden not to working-class voters but to their capitalist financiers, wrote the legislation creating ESOPs in the interests of increasing profits for the bosses and not for improving the lives of retired workers.
Even though the workers were the majority shareholders of U.S. Sugar based on stock options purchased through the Employee Stock Ownership Plan, the company board of directors carried out policies that were counter to the workers’ interests. This disenfranchisement of workers is strikingly similar to the travesty of democracy of the electoral system.
By law, those who own stock bought through ESOPs have limited voting rights versus those who bought stock in the marketplace. This effectively has enabled tiny minorities of capitalist investors to maintain control of corporations while workers “owned” the majority of shares.
The article cites that U.S. Sugar legally barred workers who held ESOP-issued stock from attending annual shareholders’ meetings. As a result, the “majority owners” were not able to direct U.S. Sugar in their own interest.
Rolling the dice for decent retirement
ESOPs were created as a method to increase the exploitation of the working class by eliminating guaranteed pensions and replacing them with “investment opportunities” for the workers. Guaranteed pensions were deferred wages the company was obligated to put aside in a bank account, safe from speculation, where it would accrue interest and be used to pay pensions as workers retired.
During the assault on the living standard of the working class initiated by the Reagan administration in the 1980s, ESOPs were introduced as a way for companies to steal the guaranteed deferred wages going into retirement funds and use them as capital to re-invest back into the company.
The ruling-class politicians and their Wall Street collaborators presented this theft as a new version of the American Dream. ESOPs would be the opportunity for every worker to own a share of the company. Some radicals who held out the hope that capitalism could be reformed hailed it as a new form of workers’ control.
Unfortunately, the leaderships of many unions also failed to see the danger in this swindle. ESOPs are a risky gamble for workers, since returns depend entirely on the company’s performance in the stock market.
The unfolding assault on the living standards of the working class during the 1980s drove down wages and benefits for workers in the United States and around the world. Ironically, as workers were investing in ESOPs, they became “owners” of companies that demanded lower wages, fewer benefits, longer hours and worse working conditions of themselves.
Capitalist investors create an opportunity for fraud and deceit by those with insider information. The New York Times article explains that U.S. Sugar was buying back shares of stock as workers retired for $194 to $205 per share. However, the company withheld information that two offers to buy the company for $293 a share had been made. In fact, an independent appraisal of the break-up value of U.S. Sugar put the per-share value at $1,273. This led to one worker with 25 years on the job receiving $53,000 less in retirement benefits.
Whether it is U.S. Sugar, Enron or United Airlines, capitalist corporations exist to make a profit by exploiting the labor of workers. Capital flows into whatever yields the greatest return on investment. Be it a privately held family business like Bechtel or mega-corporations like Microsoft, the laws of capital are the same—the ones with the greatest returns will thrive, the others will perish. Even with partial or majority ownership of a company, the workers continue be subject to capitalist exploitation.
Workers cannot guarantee a good quality of life by investing into the very system that exploits them. Only by fighting for a system based on meeting human needs that will eliminate profit altogether will workers permanently safeguard the right to a decent retirement.
